BUSINESS IN BRIEF 4/9 Vietjet celebrates National Day in style On the occasion of Vietnam's 70th National Day, first celebrated on September 2, 1945, Vietjet Air's staff will be wearing a special uniform emblazoned with Vietnam's national flag as they greet passengers. Vietjet has also recently announced the launch of a series of new routes connecting Ho Chi Minh City to Seoul and Yangon and Hanoi and Ho Chi Minh City to Pleiku in the central highlands, with millions of promotional tickets available from VND0 on all domestic and international routes up for grabs as part of the "It's time to Vietjet" campaign. To obtain promotional tickets travelers need only book online from 12pm to 2pm every day. "To celebrate the national spirit of this historic autumn, all Vietjet staff members will wear uniforms that feature Vietnam's national flag on this 70th National Day," said Mr. Luu Duc Khanh, Vietjet's Managing Director. "By showcasing a friendly, energetic, and youthful image, everyone at Vietjet wishes to express a desire to contribute to Vietnam's development and prosperity." "We offer Vietnamese and also foreign travelers the most convenient transport at economical prices and with high-quality services, all of which play a vital role in developing Vietnam's industry and supporting its integration into the international market," he added. Vietjet is the first private airline in Vietnam to operate as a new-age carrier. It boasts a fleet of 26 aircraft, including A320s and A321s, and operates 180 flights each day. PMI down to 51.3 in August The Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance, posted 51.3 in August, down from 52.6 in July, and signaling the weakest improvement in business conditions since March, according to latest report from Nikkei and Markit Economics. Having said that, “the health of the sector has now strengthened on a monthly basis throughout the past two years,” the report stated. Manufacturing output increased at the slowest pace in ten months amid reports of weakening client demand. Growth of new business also eased in August, but remained solid as panelists indicated having secured new work from both new and existing clients, according to the report. In contrast to the trend in total new business, new export orders decreased for the third month running. “Declining demand from international clients and competitive pressures from Chinese firms were mentioned as factors leading to the fall in new export orders,” the report stated. China was also mentioned with regard to changes in prices during August, with the depreciation of the Yuan reportedly a cause of lower input prices. Falling prices in world markets for items such as steel and oil were also mentioned by those firms that recorded a drop in input costs, which was the sharpest since February. Panelists passed on lower input costs to their clients, with price competition also a factor adding to deflationary pressures. The latest fall in charges was among the sharpest in the series’ history. Weaker growth of new orders led to backlogs of work decreasing for the third consecutive month, but firms continued to raise their staffing levels in August. The rate of job creation, however, slowed against July. “Suppliers’ delivery times improved for the first time in six months during August, with panelists linking shorter delivery times to fast payments and requests for quicker deliveries,” the report stated. As has been the case on a monthly basis throughout the past two years, purchasing activity rose in August. However, stocks of purchases decreased for the second month in a row. Stocks of finished goods also declined during the month, with respondents indicating that finished products had been delivered to customers upon completion, according to the report. KIS Korea looks to expand ownership in KIS Vietnam Korea Investment & Securities (KIS Korea) has announced its intention to increase its ownership in its joint venture with Vinatex and other shareholders, the KIS Vietnam Securities Corporation, under Circular No. 60, which took effect on September 1 and allows for 100 per cent foreign ownership in listed companies. Mr. Yun Hang Jin from KIS Korea told local media that the company is preparing to increase its ownership from 4.82 per cent to 94 per cent, with the remaining 6 per cent being held by individual investors. As for increasing its ownership to 100 per cent, Mr. Yun said that owning 94 per cent will give it control over KIS Vietnam so there is no need to secure 100 per cent. Vietnam is considering day-trading activities in its stock market, but only securities companies with sufficient capital will be able to take part. Many small securities companies will therefore be looking at mergers and acquisitions (M&As) to meet the capital requirements. Mr. Yun said that KIS Vietnam had sufficient capital to become involved in day-trading but would carefully consider any M&A deal that would benefit the company. Monthly government bond trading down 50% Auctions of government bonds in the primary market proceeded as planned in August but results were down significantly against July. The Hanoi Stock Exchange held 30 sessions that mobilized over VND7.83 trillion ($348.2 million), a decline of 49.9 per cent compared with July. The State Treasury mobilized VND4.2 trillion ($186.77 million), the Vietnam Bank for Social Policies (VBSP) VND1.3 trillion ($57.81 million), the Vietnam Development Bank (VDB) VND329 billion ($14.63 million), and Hanoi People’s Committee VND2 trillion ($88.94 million). The winning rate on three-year bonds was from 6.25 to 6.30 per cent per annum, 6.4 to 7.20 per cent per annum on five-year bonds, and 7.65 to 8 per cent per annum on 15-year bonds. Compared to July the three-year bond rate increased around 0.3 per cent per annum while the five-year and 15-year rate remained the same. In the secondary market, total trading during August reached 430 million bonds worth VND46.2 trillion ($2.05 billion), an increase of 34.3 per cent against July. Total repos trading stood at 208 billion bonds worth VND20.8 trillion ($924.97 million), a decline of 29.3 per cent against July. In the secondary market for Treasury bills in August, total trading reached 7.5 million worth VND737 billion ($32.77 million). There was no repos trading for Treasury bills during the month. Dong Nai's largest wharf opens for business On September 2 the Dong Nai Port JSC kicked off operations at its new wharf on the Thi Vai River in Nhon Trach district, Dong Nai province, which can berth vessels of 30,000 DWT and is the largest in the province. The new facility includes the 460-meter long and 22-meter wide wharf and two bridges 32 meters in length and 12 meters in width. Total investment was VND190 billion ($8.4 million), from Go Dau Harbor, a subsidiary of Dong Nai Port JSC. The new wharf will improve capacity at the harbor to better serve domestic and foreign clients. The wharf is also expected to facilitate aluminum bauxite exports from the Tan Rai mines in the central highlands province of Lam Dong. Dong Nai Port JSC said the building of the wharf is part of a government project on five special harbors in the country. It is expected to be capable of handling 4.4 million tonnes of cargo every year. Goods and services value grows 10% The total retail value of goods and services in August was estimated at VND271.7 trillion ($11.95 billion), an increase of 0.2 per cent compared with July and up 10.1 per cent against the same period last year, the General Statistics Office (GSO) has reported. Sales of goods reached VND207.1 trillion ($9.1 billion), up 0.9 per cent and 10.8 per cent, respectively, compared with July and August 2014. Revenue from hotels and restaurants totaled VND32.4 trillion ($1.42 billion), 0.1 per cent and 11.3 per cent higher than in July and last August, respectively. Tourism revenue fell 10.5 per cent against July, to VND2.8 trillion ($123.2 million), but rose 12.8 per cent year-on-year. Revenue from other services totaled VND29.4 trillion ($1.29 billion), a 3.2 per cent decline month-on-month and an 8.5 per cent increase year-on-year. The total retail value of goods and services in the first eight months reached VND2,116.7 trillion ($93.1 billion), an increase of 10.1 per cent compared with the same period last year and 7.8 per cent higher excluding price fluctuations of 9.1 per cent. Abundant sources of goods along with stable or falling prices in many groups of goods and services, more promotions, various packaging of goods, and improved quality of products and services were key factors behind the increase in the first eight months. State budget revenue in fine fettle State Budget revenue as at August 15 was estimated at $25.72 billion, or 63.5 per cent of the annual plan, according to the General Statistics Office. Revenue from the domestic sector stood at $19.1 billion, or 67.2 per cent the annual plan, of which revenue from State-owned enterprises was $6.06 billion, representing 61.7 per cent of the plan, while revenue from foreign-invested enterprises (excluding crude oil) was $3.82 billion, or 60.2 per cent of the plan. Crude oil revenue reached $1.99 billion, or 48.2 per cent of the annual plan, and exports and imports $4.51 billion, or 58 per cent of the annual plan. Taxes on industry, trade and non-State services totaled $3.56 billion (67 per cent of the plan), with personal income tax at $1.64 billion (71.9 per cent), land use fees $1.57 billion (90.2 per cent), and environmental protection fees $524.86 million (91.5 per cent). Total budget expenditure as at August 15 was estimated at $30.73 billion, or 60.2 per cent of the annual plan. Investment and development expenditure was $4.75 billion, or 54.7 per cent of the plan, with capital construction expenditure being $4.61 billion, or 54.4 per cent. Expenditure on the development of the socio-economy, defense, security, and the management of the State and the Party totaled $21.26 billion, or 62.3 per cent. Debt and aid repayments were $4.47 billion, or 67 per cent. SMEs crying out for capital Asia’s small and medium-sized enterprises (SMEs) need finance to help them grow into dynamic, internationally-competitive companies, according to a new report from the Asian Development Bank (ADB). The Asia SME Finance Monitor 2014, which assesses 20 countries in developing Asia, noted that SMEs make up an average of 96 per cent of all registered companies and employ 62 per cent of the workforce. They contribute, however, only 42 per cent of economic output. Vietnam had a total 359,794 micro, small, and medium-sized enterprises (MSMEs) as at the end of 2013, accounting for 96.4 per cent of all enterprises in the country. Most of these were privately owned (97.2 per cent) while foreign-invested enterprises accounted for 2.7 per cent and the remainder were State-owned. “Asia has millions of SMEs but few are able to grow to the point where they can innovate or be part of the global supply chain,” said Mr. Noritaka Akamatsu, Senior Advisor in ADB’s Sustainable Development and Climate Change Department, which authored the report. “To do this they need more growth capital and opportunities to access various financing channels.” Governments in the region need to assist SMEs become more competitive and able to participate in global value chains. This includes governments making it easier for SMEs to access new financing, such as supply chain finance. State investment moving upwards Investment capital from the State budget was estimated at VND20.3 trillion ($896 million) in August, including VND3.9 trillion ($174.5 million) of central-level capital and VND16.3 trillion ($721.4 million) of local-level capital, according to figures from the General Statistics Office (GSO). The first eight-month figure was VND132.5 trillion ($5.83 billion), equal to 64.3 per cent of the annual plan and a 3.4 per cent increase compared with the same period last year. Central-level capital totaled VND26 trillion ($1.14 billion), or 63.9 per cent of the annual plan, and was 1.3 per cent against the first eight months of last year. Capital from the Ministry of Transport stood at VND4.3 trillion ($192.1 million) in the first eight months, 63.5 per cent of the annual plan and 8.4 per cent higher year-on-year. The Ministry of Agriculture and Rural Development’s investment capital stood at VND1.87 trillion ($82.4 million), representing 65.5 per cent of the annual plan and 5.6 per cent lower than in the first eight months of last year. Investment capital from the Ministry of Construction stood at VND1.1 trillion ($47.5 million), or 69.6 per cent of the annual plan, and a year-on-year decline of 4.6 per cent. Local-level investment capital stood at VND106.5 trillion ($4.68 billion) in the first eight months, 64.4 per cent of the annual plan and increasing 4.6 per cent year-on-year. Provincial investment capital reached VND73.6 trillion ($3.2 billion), 60.8 per cent of that planned for the year and up 6.1 per cent. Hanoi’s investment capital totaled VND14.1 trillion (622.7 million), 70.2 per cent of the annual plan and a decline of 4.5 per cent against the same period last year. Investment capital from the State Budget managed by Ho Chi Minh City was VND10.5 trillion (463.9 million), 54.7 per cent of the annual plan and 4.6 per cent higher year-on-year. FDI enterprises fail to hold workers' meetings More than 80 per cent of Dong Nai Province's FDI enterprises have not organised annual meetings of labourers where they can speak to their employers about their aspirations and demands. This has violated Resolution 60 of the government, Deputy Chairman of the southern Dong Nai Province's trade union Nguyen Thi Nhu Y said. She said only 20 per cent of the FDI enterprises organised meetings of labourers every year, as requested by the resolution, while 100 per cent of the state enterprises respected the resolution. The resolution, in force for two years , aims to build a stable and convivial relationship between the members of the enterprises, as well as promote democracy and protect workers' rights. It focuses on regular dialogue between the employer and the workers every three months, and an annual meeting of the workers. However, many FDI enterprises do not understand the importance of these meetings and fail to respect the resolution, despite a promotion campaign by the provincial trade union. Y said the state should penalise the enterprises that do not organise regular dialogues and conferences of workers, as requested by the resolution. Two highway projects to be completed by 2017 The project for upgrading the Ha Long - Mong Duong section of National Highway 18, was launched yesterday. The Bien Cuong BOT Joint Stock Company, the major investor of the Ha Long - Van Don Highway project, will also implement the upgrade of the Ha Long - Mong Duong section of National Highway 18. The VND2,000-billion (US$89 million) National Highway 18 upgrade will cover 31.25km, from Ha Tu Ward of Ha Long City to Mong Duong Ward of Cam Pha City in Quang Ninh Province. The width of the highway will be 20.5m. The Ha Long - Van Don Highway project will cover nearly 60km, with a total investment of VND12 trillion (US$534 million). The width of the highway will be 24.5m, with a possible speed limit of 100km per hour. The two projects are expected to be completed by the end of 2017. Exports face uphill tasks to keep yearly target Much needs to be done from now through the end of the year to meet the export growth target of 10 percent, according to the Ministry of Industry and Trade (MoIT). The export price and volume of many agricultural and mineral products will continue their downward trends, affecting the increase of export value, Nguyen Tien Vy, Head of the ministry’s Planning Department, said at a meeting in Hanoi on September 3. He said domestic companies’ exports will continue to see a slow growth pace as major commodities such as agro-products, seafood and minerals are on the decline. The export growth, according to Vy, is becoming fragile for relying too much on big foreign direct investment (FDI) enterprises whose sales can suffer from unexpected factors. Besides, Vietnam’s dependence on imported input materials for production and export may lead to a decline in competitiveness in the event of changes in prices and policies. Phan Thi Dieu Ha, Deputy Head of the Department of Imports and Exports, said as domestic enterprises’ exports decrease, it is necessary to focus on administrative reforms to take advantage of free trade agreements. Vy said traditional markets such as Southeast Asia, East Asia, China, Australia, the United States, the European Union, Russia and Eastern Europe countries, Canada and India will gradually expand. According to a report from the MoIT, the export value in the first eight months reached 106.3 billion USD, up 9 percent against last year. Of which, the domestic sector contributed 31.7 billion USD, down 2.3 percent; and the FDI sector, 74.6 billion USD, up 14.7 percent. In the eight-month period, Vietnam’s import surplus reached 3.6 billion USD, equal to 3.4 percent of the total export value. Domestic retail sales increase 10.1 per cent Total retail sales of Viet Nam's goods and services reached VND2,116.67 trillion (US$94 billion), a 10.1 per cent increase over the same period last year, or 9.1 per cent if inflation is excluded. Among the total, retail sales of goods contributed three-fourth, with a value of $74.8 billion, increasing by 10.8 per cent. Retail sales of accommodations, restaurants and catering services posted growths of 11.7 per cent, while the tourism sector accounted for 0.9 per cent According to GSO expert Vu Manh Ha, the purchasing power showed improvements thanks to an abundant supply, stable prices and diversified and high quality products, along with many promotional programmes conducted by companies. Key consumer products and essential services saw stable prices in the first 8 months of the year. Restaurants witnessed slight increases at 0.1 per cent, transport services were up 2.12 per cent, healthcare services up 0.01 per cent, drugs rose by 0.03 per cent, soft drinks were up 0.07 per cent and electricity, tap water and gas were down 0.45 per cent. Further, Ha attributed the retail sales increase to the decrease in the consumer price index. He noted that in the remaining months, total retail sales would improve as the supply of products and consumer goods continue to stabilise. Purchasing power was one of the indicators that reflected the macroeconomic recovery in the first eight month of this year. Property sales survive ghost month Despite local taboos associated with buying houses in the seventh month of the lunar calendar, property transactions have not seen the usual lull this year. The ghost month, also known as the month of lonely spirits, which began on August 14 this year and will end on September 12, is typically associated with bad luck. As a result, few property transactions take place during this time, but attitudes appear to have changed this year. In recent days, several developers launched sales for their projects and introduced attractive promotions to attract buyers. On August 22 and 23, resort villas of Vingroup's Vinpearl Premium and BIM Group's Lotus Residences were released for sale in Ha Noi, drawing the attention of hundreds of investors seeking investment opportunities amidst the recovery of the property market, especially within the high-end segment. BIM Group said its sale release last weekend saw a high rate of successful transactions. Other projects were also put on sale recently, including the Eco-Green City, Imperia Garden and Hateco. To attract buyers, developers launched many attractive promotions and commitments, such as preferential loans, lucky draws and gifts for purchasing decisions made within this month. Guaranteed profits also made resort projects attractive to buyers. According to Tran Thu Hien, director of DTJ Group, a property distributor, property transactions have not seen a dip in the seventh lunar month in recent years, comparing it favourably with other months of the year. She noted that many developers continued to launch sales for their projects and investors still made purchase decisions during the month. Phan Thanh Diep, general director of Phu Tai Real Estate Company, said the taboo on buying houses during the ghost month has weakened. Many developers even saw better-than-expected sale results, he said. Exclusive promotions for the ghost month also helped attract buyers. Vu Cuong Quyet, director of Northern Dat Xanh Real Estate Company, said developers rarely offered promotions for high-quality projects; thus, purchase decisions, if made within this month, could bring many benefits to buyers. Red River Delta attracts more foreign investment The Song Hong (Red River) Delta region was able to attract US$5.68 billion in foreign-direct investment (FDI) in the first eight months of this year, accounting for 42.6 per cent of the total FDI that the country attracted. According to the Foreign Investment Agency under the Ministry of Planning and Investment, the latest addition has brought the FDI pledged in the region to a total of $64.8 billion as of August 20, making it the country's leading region in this regard. The region comprises 11 cities and provinces, including Ha Noi, Bac Ninh, Hai Phong, Quang Ninh, Hai Duong, Ha Nam, Hung Yen, Vinh Phuc, Nam Dinh, Thai Binh and Ninh Binh. Among these reviewed localities, Bac Ninh Province topped the list with investments of $3.33 billion, accounting for 58.6 per cent of region's total FDI inflows in eight months, thanks to an additional $3 billion investment made by South Korea-invested Samsung Display Vietnam Co to expand its factory in the province's Yen Phong 1 Industrial Zone. Licensed in 2014 with initial registered investment capital of $1 billion, the factory focused on research and development for manufacturing high-definition (HD) displays and assembling next-generation HD displays, including curved and foldable displays. Ha Noi came second with $569.3 million, equivalent to 10 per cent of the region's total FDI, followed by Hai Phong City with $474.3 million or 8.3 per cent. Meanwhile, Thai Binh Province lagged behind other 10 localities as it attracted only $5.2 million, accounting for a modest 0.1 per cent of the foreign investments registered in the region. EVN promotes electricity network in southern region The Steering Committee for the Southwest Region and the Electricity of Vietnam (EVN) pledged to join hands to develop the electricity network in the region. An agreement to this effect was signed on September 3 in the Mekong Delta city of Can Tho, witnessed by representatives from the EVN and regional authorities. The committee will work with localities and sectors to develop incentives for implementing key electricity projects in the Mekong Delta region. Meanwhile, the EVN will provide financial support for social welfare activities, targeting impoverished people, social beneficiaries, and students in the region. Addressing the signing ceremony, Duong Quang Thanh, Chairman of the EVN’s Member Council, said the group will accelerate the implementation of electricity projects in Ho Chi Minh City and other localities to help boost local socio-economic development. Focus will also be on developing electricity networks in Soc Trang and Ca Mau provinces in order to ensure electricity supply for shrimp-farming areas, Thanh added. From 2016-2020, the group will devote investments to expanding its network nationwide, especially in rural areas and islands, in order to fulfil the criteria of the new-style rural area building programme and improve local residents’ living conditions. Deputy Head of the committee Nguyen Phong Quang hailed the significant contributions of the EVN to the Mekong Delta achievements, saying it has helped more than 90 percent of local residents connect with the national power grid. During the occasion, the EVN donated 1.5 billion VND (66,000 USD) to help disadvantaged children in the region. Petrol prices cut by nearly 1,200 VND per litre The retail prices of RON 92 and E5 petrol were reduced by 1,198 VND (0.05 USD) per litre as of 3 pm on September 3, marking the 15th price adjustment this year. According to the Ministries of Industry & Trade and Finance, RON 92 petro will cost no more than 17,338 VND (0.77 USD) per litre while bio-petrol E5 is to stand at a maximum of 16,843 VND (0.75 USD) per litre. Prices of diesel and kerosene went down 111 VND and 123 VND per litre, respectively, while fuel oil (FO) fell by 785 VND per kilogram. With the 5 th successive reduction in recent time, the petrol and diesel prices have dropped by 550 VND and 3,670 VND per litre, respectively, against those from earlier this year. Electricity of Vietnam takes measures to ensure supply The Electricity of Vietnam (EVN) pledged to supply sufficient electricity in September, including using oil-fuelled thermal power plants while the Nam Con Son gas supply system is suspended from September 12-15. The EVN also implemented measures to ensure the safety of reservoirs, hydroelectric power plants and the delta area during the flood season and prepare equipment and materials for incidents. According to the EVN, from the beginning of the year through the end of August, the company produced and purchased a total of 105.15 billion kilowatt hours, up 11.78 percent from last year. Of the figure, hydroelectricity accounted for 34.95 percent, coal-fueled thermal power 33.64 percent, gas-fuelled turbines 29.99 percent, oil-fuelled thermal power 0.31 percent and purchased power 1.11 percent. Consumed commercial electricity in the period reached 93.8 billion kilowatt hours, up 11.54 percent against the same period, in which the industry-construction sector consumed 53.3 percent, the commercial section held 5.2 percent and the consumer electricity used 35.4 percent. The company urged its units to overcome issues caused by flooding and storms at the Son La, Huoi Quang and Lai Chau hydroelectric plants and the Mong Duong 1 thermal power plant. The company ensured sufficient coal supply for the Vinh Tan and the Duyen Hai 1 thermal power plants. Local shipbuilder builds ships for Venezuela The Damen Group from the Netherlands and the local Song Thu Shipyard Corporation have begun building two Stan patrol ships, SPA 5009, for export to Venezuela. The large patrol vessels, which will be fully equipped for patrol duties in harbours, coastal waters and offshore areas, are the second export contract signed with Venezuela this year. The Da Nang-based shipbuilder started building the two Stan patrol ships in April. Last year, Song Thu and the Damen Group also started construction work on a dredging ship, TSHD2000, the first for Russia's Rosmorport Company. The shipyard corporation, which is a major shipbuilder in Vietnam, has built 24 vessels for export, including fast crew supply ships, rescue ships, salvage tugs and drive tugs, besides patrol boats for the Middle East, South America, Europe and the domestic market, with an annual export volume of 55 million USD. Vietnamese tea exports decrease Falling exports are putting pressure on the tea industry to enhance product quality amid rapid international integration associated with growing harsh competition. The Ministry of Industry and Trade said Vietnam is the fifth largest tea exporter in the world, but tea is mainly exported as a raw product with low export price, equal to about half of the world's average price. Statistics showed that tea exports dropped by 5.6 percent in volume to 79,000 tonnes and 4.8 percent in value to reach 134 million USD in the first eight months of this year, compared with the same period last year. The ministry said quality is currently the greatest problem that the tea industry encounters, which could lead to loss of export markets to competitors. There are many factors affecting the Vietnamese tea quality, including scattered cultivation, lack of management of pesticide use, outdated farming techniques and lack of coordination between plantations and processing and distribution. President of the Vietnam Tea Association Nguyen Huu Tai said there should be an organisation to monitor the use of pesticides in tea cultivation to ensure its quality. Minister of Agriculture and Rural Development Cao Duc Phat said tea is among the important agricultural exports of Vietnam, adding that attention must be paid to developing tea cultivation, especially improving tea quality and ensuring food hygiene standards. Phat said the tea farming methods must be improved to meet hygiene standards for domestic consumption as well as exports, including the planning of tea plantation areas for processing firms. The development of a Vietnamese tea brand together with the organisation of trade promotion activities is also indispensable for boosting tea exports. In addition, the ministry would tighten State management over the use of pesticides and fertilisers, while improve farming techniques for farmers, he said. Notably, the ministry is planning to grant codes to tea plantation areas to trace the origins of tea as part of efforts to professionalise tea production. The ministry's statistics showed that Vietnam's tea exports last year reached 133,000 tonnes, worth 230 million USD, ranking fifth in the world after China, India, Kenya and Sri Lanka. The area under tea plantation totalled 130,000ha in the country by the end of 2014. Lam Dong, Thai Nguyen, Ha Giang, Phu Tho and Yen Bai were the provinces with the largest tea plantation areas. ADB report: SMEs need finance to grow Asia’s small- and medium-sized enterprises (SMEs) need finance to help them grow into dynamic, internationally competitive companies, said a new report from the Asian Development Bank (ADB). In its Asia SME Finance Monitor 2014 released on September 2, the ADB emphasised that SMEs’ growth is key to strong, sustainable growth in Asia as the world recovers from the recent global economic slowdown The report, which assesses 20 countries in developing Asia, noted that SMEs make up an average of 96 percent of all registered firms and employ 62 percent of the labour force. However, they contribute only 42 percent of economic output. In the case of Vietnam, the country had a total 359,794 micro, small, and medium sized enterprises (MSMEs) as of the end of 2013, accounting for 96.4 percent of total enterprises in the country. Most of the establishments are privately owned (97.2 percent) while foreign invested enterprises accounted for 2.7 percent and the remaining are state-owned. There were 5.1 million workers employed in the MSMEs sector, accounting for 46.8 percent of the country’s total work force, the report said. The ADB called on governments in the region to help SMEs become more competitive and able to participate in global value chains. This includes governments making it easier for SMEs to access new financing, such as supply chain finance. According to the bank, limited access to bank credit is a persistent problem in Asia and the Pacific. It noted that lending to SMEs has declined over the course of the global financial crisis and in 2014, they received only 18.7 percent of total bank loans. While noting that several countries have made progress tackling this, the ADB said the region needs to further develop credit bureaus, collateral registries, and credit guarantees to expand financial outreach, particularly in low-income countries. It said governments need to put in place a comprehensive policy framework to help nonbank financial institutions expand their SME financing options. Ongoing efforts to open up the equity markets to SMEs would also help provide SMEs with the long-term financing they need to mature, according to the ADB report. Vietnam to use electronic toll collection technology A Memorandum of Understanding (MoU) on the use of electronic toll collection systems was signed on August 31, joining the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), the Mitsubishi Heavy Industries, Sojitz Corporation and the Vietnam Road Administration (VRA). Earlier, the Ministry of Transport agreed to implement electronic toll collection systems on National Road No 1 and a section of the Ho Chi Minh Highway that runs through the Central Highlands region using the radio-frequency identification (RFID) technology. The electronic toll collection will be also used at expressways using capital from Japanese government as well. Since 2011, Vietinbank has coordinated with the VRA to implement a pilot project on non-stop automated toll collection via bank payment at six toll points on national roads using Europe’s active technology. By the end of 2014, 23 toll points nationwide were using the technology. Many aircraft need registering in Vietnam Aircraft owned by Vietnamese organisations or individuals and those lease-purchased or leased without crews for 24 months or longer must be registered as Vietnamese to operate in Vietnam. This rule will go into effect on October 1. The registration must be made within six months of importing the aircraft into Vietnam. The requirements were noted in the recently released Government Decree No 68 on the registration of nationality of and rights to aircraft. The Decree prescribes the registration and deregistration of nationality of and rights to aircraft; grant of codes for registration and deregistration of international interests for Vietnamese nationality aircraft; and irrevocable deregistration and export request authorisation. The new regulations do not apply to military aircraft, special-use aircraft for customs and public security forces and other aircraft used for performing state tasks, except those used for civil purposes. Under the Decree, to be eligible for the registration of Vietnamese nationality, the aircraft must not bear the nationality of any other country or have had the nationality of a foreign country deregistered. It must also have all the valid paperwork to prove aircraft ownership or the right to possession of the aircraft under lease or lease-purchase terms. In addition, it must meet the requirements on age of the used aircraft (if any) and must satisfy the law-prescribed conditions and requirements related to ensuring national defence and security, aviation safety and security and environmental protection. This Decree replaces Decrees No 70/2007/ND-CP of April 20, 2007, and No. 50/2012/ND-CP of June 11, 2012. HCMC reveals support industry development policies Ho Chi Minh City will form a production network of support industry products with the aim of meeting requirements of firms in the city, training human resources and using 500 hectares of land for investment attraction at export processing zones and hi-tech industrial parks by 2015-2020. According to an announcement by the city People’s Committee, the support industry's development will attach to small and medium enterprises that are targeted as key role in mobilizing participation of other economic classes. The Department of Industry and Trade has been tasked to act as counselor, manage and implement the industry’s development polices in the city. It will receive information, guide and solve issues for organizations and individuals. Flexible fiscal & monetary policies help boost economic growth In spite of numerous difficulties, the Vietnamese economy continued to attain positive indicators in almost all fields. “The macro-economy was stable. The economy was on the right track. The business environment was improved. Social security was ensured,” said Minister of Planning and Investment Bui Quang Vinh. Economic experts assessed that the macro-economy in August, 2015 was controlled properly and continued to rebound with positive outcomes despite strong impacts from the regional and global markets, including a sharp drop in oil prices, stock market fluctuations as well as Chinese Yuan devaluation. In January-August, industry production index picked up 9.9% year-on-year. Consumption price index (CPI) saw a month-on-month decline of 0.07% and a year-on-year growth of 0.61%. Total retail sales and service revenue in August was estimated at VND 271.7 trillion, up 0.2% against last month and 10.1% against the same period last year.   As of August 20, Viet Nam attracted 1,219 new FDI projects worth US$7.89 billion, posting a year-on-year surge of 8.7%. Meanwhile, 389 FDI projects got additional capital of US$5.46 billion, up 82.8% against the same period last year. In August, export turnover valued at US$14.5 billion, over 9,300 enterprises were founded, and over 1,350 enterprises resumed operation.   However, the economy still faced challenges such as declining exports, high exchange rates (chiefly caused by the Yuan devaluation), reduced budget collection (sparked by oil price drop), and stock market fluctuations. PM Nguyen Tan Dung requested ministries and agencies to continuously keep a close watch on the situations; make accurate forecasts; and seek timely measures even in the worst cases. He also tasked ministries, agencies and localities to pursue the preset goals especially macro-economic stability, GDP growth rate, inflation curbing, budget collection, import and export; properly control and stabilize exchange rates and interest; develop the stock market; balance budget collection and spending; boost collection and exercise thrift-practice./. ASEAN Single Window piloted Viet Nam on Monday piloted the ASEAN Single Window (ASW) connection with Indonesia and Malaysia. The Customs Newspaper was quoted as saying that the General Department of Viet Nam Customs has positively connected on a trial basis the ASW with regional peers. The process related to certificates of ASEAN origin – Form D. As of late August 31, the country piloted the connection with Indonesia and Malaysia. The information exchange with Indonesia (the first member of ASEAN) took place successfully under favourable conditions. Meanwhile, Viet Nam and Malaysia are finalizing necessary steps to properly run the information sharing system. Earlier, Minister of Finance Dinh Tien Dung sent a document which suggests the PM hold an official ceremony on the launching of the National Single Window on September 10, 2015. HCM City sees strong economic growth HCMC’s economy has posted strong growth this year with retail sales of goods and services, industrial production and direct foreign investments (FDI) all picking up. According to the city’s January-August socio-economic performance report released last week, total retail sales and export turnover rose  year-on-year. In particular, total retail sales of goods and services this year are estimated at more than VND437 trillion, up 11% year-on-year. January-August exports, excluding crude oil, are projected to reach US$18 billion, up 9.5%. According to Thai Van Re, director of the HCMC Department of Planning and Investment, the city’s industrial production has continued to expand and the index of industrial production has inched up 6.8%, up from the 6.5% recorded in the same period a year ago. In the tourism sector, international visitor arrivals in HCMC have grown 5% to 2.83 million and tourism revenues have edged up 4% to over VND60.7 trillion. Regarding FDI attraction, the city had licensed 353 new projects worth a total of US$2.32 billion as of August 20, up 46.5% and 2.2 times over last year’s same period respectively. Newly approved capital for newly registered and operational FDI projects totals US$2.8 billion in the period, increasing by 2.3 times. Coal mining cost higher than expected The cost of extracting coal is actually higher than currently calculated as it has not included the cost of dealing with environment impact and human health, according to experts. Shin Furuno, a campaigner of the 350.org, a Japan-based non-government organization which is working to build a global climate movement, said coal is sold at a cheaper price than it actually costs because people have not calculated correctly and carefully all costs of exploitation, transportation and consumption. The coal extraction process leaves bad impacts on workers’ health and causes environmental destruction and degradation of natural resources in the future. “Currently, the value of coal on the market is constituted by capital invested in coal mines, salaries for workers and production cost, while negative effects are not taken into account on the health of workers, air pollution which threatens tourism development in the localities where coal is mined, and the climate,” he said. Pham Van The, a 43-year-old miner who has worked for 22 years at Vang Danh coal mine in the northern province of Quang Ninh, said he earns VND15 million (US$667.8) to VND20 million per month. But The is concerned about his health due to the poor working conditions, which can prevent him from continuing his job in the next few years. “A common disease among miners is silicosis because previously we were not equipped with protective masks and felt hard to breathe after work.” According to scientists, the country has large coal reserves totaling billions of tons, but mines must be dug at a depth of thousands of meters, making extraction extremely difficult. Vietnam National Coal and Mineral Industries Group (TKV), the nation’s biggest coal mining entity with annual output of 40-50 million tons, supplies energy-guzzling sectors such as electricity generation, cement and steel. It provides jobs for 150,000 local laborers. A representative of Vang Danh Coal Joint Stock Company which is operating at Vang Danh coal mine, the biggest mine of TKV which has annual output of 3.5 million tons, said the mining area has been getting deeper and deeper and the exploitation conditions are growing more difficult. Currently, 6,220 workers of the company extract coal at a depth of 150 meters and explore for new coal at the same time at a depth of 175 meters. Japanese SMEs committed to Vietnam Japanese investment approvals in Vietnam last year were mainly for small and medium enterprises (SMEs) and this investment trend will continue in the coming years, heard a seminar last Friday. Speaking at the seminar organized by the 2030 Businessmen Club under the Saigon Times Club and Japan Circle, Masashi Mochizuki, deputy general director of Vietnam Export-Import Bank (Eximbank), said investment data of the Japanese central bank showed Japanese investments in Vietnam soared in 2012 and 2013 but declined considerably last year. Japanese investments in Vietnam amounted to 317.7 billion yen in 2013 but dipped to 141.8 billion yen one year later. Explaining the decline, Mochizuki said Japanese Prime Minister Shinzo Abe’s economic policies had led the Japanese yen to fall and overseas investments by Japanese firms to drop.  The yen fall could continue, thus affecting Japan’s offshore investments, he added. However, in the medium and long terms, Japanese enterprises will continue to invest offshore as the Japanese economy is dogged by a slew of problems like the fast aging population, he noted. The drop in Japanese investments results from smaller investment sizes. Big investments by Japanese enterprises were seen in 2012 and 2013. Nevertheless, the number of Japanese investors in Vietnam is on the rise. This is a clear indication that more Japanese SMEs are coming to Vietnam, according to Mochizuki. Regarding the fields most attractive to Japanese investors, Mochizuki said, the processing industry is appealing to foreign enterprises. Mochizuki said the 100% foreign-invested model is popular in the processing industry as it does not need local partnerships, which is evident in Japanese enterprises investing in processing for export. Japanese companies are also interested in the manufacturing industry with products consumed in the Vietnamese market like autos and food as domestic demand is growing steadily. Despite the huge development potential of manufacturing, investors will encounter difficulties with distribution. Many of the Japanese enterprises that entered Vietnam around 20 years ago said they would fall into trouble if they did not have local distribution partners. If Vietnam fails to solve the issue, Japanese investors will continue to find it hard to sell their products in Vietnam, according to Mochizuki. Japanese investors tend to expand operations to other sectors such as agriculture, transport, retail and property. With agriculture, while Japan’s population is declining, Vietnam has 70% of its population working in agriculture and value is being added to farm produce, which might require Japanese technologies so as to export produce to other Southeast Asian countries. However, this will not work without cooperation between Vietnamese and Japanese agricultural companies. With other fields like transport, logistics, retail and property, Japanese enterprises cannot operate on their own but they need Vietnamese partners. According to Mochizuki, what Vietnamese enterprises should know is that Japanese enterprises often network and seek partners via bank branches though it will be better if both sides get to know each other and network themselves. Under Decree 60 that will take effect next September 1, the foreign ownership limit at most listed companies will be raised from 49% to 100%, which will help attract more foreign investments. From next month Japanese enterprises transferring technologies to Vietnam can raise their ownership at local firms. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR